Independent Vermont senator Bernie Sanders has introduced federal legislation (S. 2210) to replace the current patent and non-patent market exclusivity system for drugs in place since the 1984 Waxman-Hatch Act with a new prize system to “provide incentives to encourage entities to invest in research and development of new medicines…and to enhance access to such medicines by allowing any person in compliance with [FDA] requirements to manufacture, distribute, or sell an approved medicine.”

Sanders’ Medical Innovation Prize Act of 2007 says that notwithstanding US patent laws and other laws like Waxman-Hatch, no person shall have the right to exclusively manufacture, distribute, sell, or use a drug or biological product, or have the right to rely on the 30-month stay-of-effectiveness period for Orange Book patents.

Instead, a person could receive a prize payment in lieu of remuneration.

The Hyman, Phelps & McNamara online FDA Law Blog says the bill provides that the prize payment would come from a new Fund for Medical Innovation Prizes established in the U.S. Treasury. Each fiscal year, an amount equal to 0.6% of the U.S. gross domestic product for the preceding fiscal year would be appropriated to the fund.

To be eligible to receive a prize payment, a person would have to be either (1) the first person to receive market clearance with respect to the drug or biological product or (2) the holder of the patent with respect to a manufacturing process.

“The substitution of prize fund awards to companies for successful product research,” says the bill, “and development in place of marketing exclusivity for new medicines will lead to more competition, greater utilization of generic products, lower prices, and savings to federal, state and local governments, private employers and individual consumers of more than $200 billion per year. Savings in governmental expenditures alone would be more than sufficient to fund the prize fund established through this legislation.”